EUR/USD Technical Outlook: Retreat Imminent?

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US Dollar, Euro, EUR/USD – Technical Outlook:

  • EUR/USD has run into important resistance.
  • The threat of a minor retreat is rising.
  • What are the signposts to observe?

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EUR/USD TECHNICAL FORECAST – SLIGHTLY BEARISH

The latest stalling of momentum is an indication that the Euro’s rally in opposition to the US Dollar is exhibiting indicators of fatigue, pointing to the chance of an imminent retreat.

EUR/USD has run into main resistance: the 200-day shifting common, coinciding with the August excessive of 1.0370, close to the January 2017 low of 1.0340. The 14-day Relative Strength Index is popping round, simply as spot exams key resistance. The lack of ‘force’ is a sign that EUR/USD is probably not ripe simply but for a break greater.

EUR/USD Daily Chart

Chart Created Using TradingView

Furthermore, spot has failed to maneuver towards the highest finish of a rising pitchfork channel in play since October – it has moved to a ‘lower gear’, that’s, the underside a part of the channel, indicating fading upward momentum. Indeed, it may retreat barely within the close to time period. The threat of retreat was highlighted final week, however the drop then turned out to be shallow.

Any pullback from present ranges may push the pair to quick help on the November 21 low of 1.0225, which may limit the draw back for now. Any break beneath 1.0225 would set off a minor double high (the November highs), implying a attainable fall towards parity, roughly round a quite-strong cushion on the end-October excessive of 1.0095, close to the 89-day shifting common.

EUR/USD 240-minutes Chart

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Chart Created Using TradingView

The three-month shifting common just lately changed into help from resistance – EUR/USD has stayed below this barrier since mid-2021. Hence, if the two-month rally has legs, the pair wants to remain above the shifting common for one more push greater. A failure to take action would elevate the chances that medium-term downward strain is returning.

After making a 20-year low in September, EUR/USD’s 8% beneficial properties since is a mirrored image that the downward strain has eased considerably within the close to time period. However, it might be too quickly to conclude that the worst is over for the only currency. A break above the 200-day shifting common can be an indication that the medium-term bearish outlook is altering. A decisive push greater may pave the way in which towards 1.0615 (the 38.2% retracement of the 2021-2022 slide).

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— Written by Manish Jaradi, Strategist for DailyFX.com





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